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Yesterday’s analysis had two hourly wave counts. Upwards movement for Tuesday’s session fits the main wave count better. The alternate remains valid but does not have the right look so I will discard it.

Click on the charts below to enlarge.

S&P 500 daily 2013

The bigger picture sees upwards movement from the end of the “credit crunch” at 666.76 as a double zigzag structure for a cycle degree b wave lasting so far 4.25 years. The second zigzag is almost complete. When it is done we should see another crash to make substantial new lows below 666.76, if the main monthly wave count is correct. If, however, the next upwards wave sees an increase in momentum beyond that seen for minor wave 3 then the alternate very bullish monthly wave count must be seriously considered. I will be watching momentum carefully over the next few weeks.

Within intermediate wave (C) minor wave 1 was extended.

Minor wave 3 is just 5.82 points short of 0.618 the length of minor wave 1. I would expect the upcoming minor wave 5 to reach equality with minor wave 3. This would be achieved at 1,749.38, and this is also a maximum point for upwards movement because minor wave 3 may not be the shortest wave.

At 1,740 intermediate wave (C) would reach equality with the orthodox length of intermediate wave (A). This gives us a 9 point target zone, and I favour the upper end of the zone because it is calculated at a lower wave degree.

If minor wave 4 were to continue any lower it may not move into minor wave 1 price territory. This wave count is invalidated with movement below 1,597.35.

Draw the channel about intermediate wave (C) using Elliott’s second technique. Draw the first trend line from the lows of minor waves 2 to 4, then place a parallel copy upon the hight of minor wave 3. Add a mid line to the channel. Expect minor wave 5 to end about the mid line, or to find resistance at the upper edge.

The very wide maroon trend channel shown here is copied over from the monthly chart. We may find this movement ends as it finds resistance at the upper trend line.

At this stage there is no divergence on the daily chart level with price trending higher and MACD also trending higher. This is an indication that the upwards trend remains in place. I would expect to see some classic technical divergence before the end of this trend.

S&P 500 hourly 2013

Minute wave iii has now moved beyond the end of minute wave i which is required, and it is showing an increase in upwards momentum. This wave count has a reasonably good look after Tuesday’s upwards movement.

Within minute wave ii minuette waves (a) and (b) are complete. Within minuette wave (c) on the five minute chart it looks likely that subminuette waves i, ii and iii are complete. Subminuette wave ii was a deep 72% zigzag correction. We would expect subminuette wave iv to be a shallow sideways correction. Subminuette wave iv may not move into subminuette wave i price territory. This wave count is invalidated in the short term with movement below 1,646.50.

Subminuette wave iii is just 1.25 points longer than equality with subminuette wave i. At 1,672 subminuette wave v would reach equality in length with subminuette wave i.

At 1,677 minuette wave (c) would reach 1.618 the length of minuette wave (a). This gives us a 5 point target zone, favouring the lower end because it is calculated at a lower wave degree.

When minute wave iii is completed then minute wave iv must overlap back into minute wave i price territory, so must move below 1,648.69. Minute wave iv may not move beyond the end of minute wave ii. This wave count is invalidated with movement below 1,608.07.